Analysis: Should government money be spent on spring training stadiums?

FILE PHOTOs
St. Lucie County is looking into attracting a second Major League Baseball team to the facilities the Mets use in Port St. Lucie. Vasili Kaloudis (left), 11, of Fort Pierce, Aaron Diaz (center), 10, of St. Lucie West and Drew Stubbs (right), 10, of Fort Pierce, watch the first inning of the spring training game between the New York Mets and the New York Yankees from behind the right field fence in April 2012 at Tradition Field in Port St. Lucie.

Treasure Coast Newspapers

associated press file photo
Boston Red Sox’s Mike Napoli (left) plays in a spring training exhibition baseball game against the Toronto Blue Jays on March 12 in Fort Myers. In 2012, the Boston Red Sox opened JetBlue Park, a $78 million, publicly funded state-of-the-art facility across the state in Lee County.

AP2013

Fans watch a spring training game between the Chicago Cubs and the Colorado Rockies at Hohokam Park on March 6, 2012, in Mesa, Ariz. The Cubs are expecting to practice in a new $84 million facility in 2014, currently being built for them in Arizona.

AP2012

FILE PHOTO
Joe Nagy of Stuart reaches for a foul ball over the glove of New York Yankees third baseman Doug Bernier during Tuesday’s spring training game between the New York Mets and the Yankees at Tradition Field in Port St. Lucie.

Florida coastal counties that play host to spring training showed no economic advantage compared to counties that spend tax dollars on other projects, according to my analysis of sales tax data from 2005 to 2012.

State officials are discussing putting as much as $40 million into spring training facilities with the caveat that local governments must match any state money. St. Lucie County is interested in attracting another team to Tradition Field, in addition to the New York Mets. The county commissioned a study released in February that showed the price tag would be $60 million.

But the questions of whether increased public tax dollars should go to spring training facilities and whether the communities get economic payback remain, especially when stadiums are getting more expensive.

To encourage public support, teams and politicians have touted the economic benefits of having Major League Baseball in a community's backyard.

So I conducted my own simple economic analysis to find out the financial impact of spring training, and the results beg the question of why communities pay top dollar to draw Major League Baseball teams.

I looked at sales tax data from 2005 to October 2012 for 20 coastal Florida counties, some of which host spring training. Sales tax is perhaps the best indicator of economic impact because it accounts for most legal spending. Sales tax is collected on everything from luxury cars to paper clips with a few exceptions, such as groceries and medicine. A full methodology of the study is in an adjacent article.

The study is based on the hypothesis that if spring training provides an economic bump over a long period of time, sales tax collections should be greater for host counties compared to counties that are not home to spring training sites.

Instead, the analysis shows counties without spring training sites fared better than host counties during the seven years.

Also, counties that don't have spring training had a population increase of 10.3 percent whereas host counties had a population increase of 8.8 percent from 2005 to 2011, according to the American Community Survey by the U.S. Census Bureau. Population increases help boost sales tax revenue because more people means more purchases. Still, when population is factored out, counties without spring training still performed better than those that have teams.

The chart below shows the data in another format to further highlight the differences between revenue collections for spring training hosts versus counties without spring training. The below chart averages the collections for the last seven years. Florida has a natural arc for collections that peak during the winter months and drop during the summer.

Some studies, including the study commissioned by St. Lucie County, show there is an economic benefit from having spring training that outweighs the cost. The St. Lucie County study done by the University of Michigan showed a total annual economic impact of about $62.3 million if the county had two teams share a facility.

Such studies often determine attendance as well as the amount spent by the attendees in the community and use a multiplier and show the economic impact.

But those studies do not show changes in broader economic data, meaning spring training spending could be taking money from other spending that would have occurred had spring training not existed. For example, a person might choose to spend a Saturday paying for spring training tickets and a meal at Tradition Field instead of going to a nearby restaurant and movie theater.

Also, it's possible money going into tickets for a professional team gets immediately transferred to the team's home base and then used in that community as opposed to the community where that team has spring training.

My analysis takes a long-term view of the economic impact of spring training. However, the chart below considers short-term impact as well. Some could argue that bringing a new team to an area increases the area's sales tax suddenly and then levels off at a higher rate. Such a change would not show up in the analysis, which looks at long-term trends. However, the chart below shows Indian River County, which lost the Los Angeles Dodgers in 2008, and Charlotte County, which gained the Tampa Bay Rays in 2009.

If a spring training facility generates a short-term bump that is sustained over the long term, Charlotte County should be lower than Indian River County from 2005-08, while gaining suddenly compared to Indian River County from 2009-12. Instead the opposite is true, and Indian River County has caught up to Charlotte County after the Dodgers left. It's fair to suggest that the Rays, given their Florida home, are not the best team to use. However, Charlotte County is the only Florida county to gain a team while being without a team for more than one season during the study's time period, so there are no alternatives for comparison.

My study is not the first to question the economic impact of spring training.

John Zipp, a professor and associate dean at the University of Akron, conducted a study following the 1994-95 players strike when replacement players competed in 1995 spring training games. Attendance was down 62 percent, yet taxable sales increased 4.7 percent, so he concluded spring training does not create an economic impact.

Yet counties, communities and states have bid against one another to try to attract professional teams, giving Major League Baseball teams considerable negotiating leverage to turn practice fields into palaces.

"If the public puts in an art museum, the town, county, etc., the art museum doesn't threaten to leave," Zipp said. "They don't hold the town up and say, ‘We're leaving unless we get more of this.' "

Dollars for spring training facilities typically come from tourism development taxes charged on hotel stays, but when the economy sinks, the taxes are not always enough to cover the costs. For example, St. Lucie County spent $685,000 out of its general fund to pay for the New York Mets to play at Tradition Field last budget year and $188,000 is slated to come from the general fund this year, according to county spokesman Erick Gill.

The county combined with the state to make about $15.8 million in upgrades to Tradition Field in 2003 and the county agreed to $2.5 million in stadium upgrades in 2011. The stadium was built in 1988 with the help of developer Thomas J. White.

The county also pays more than 73 percent of its 5 percent tax on hotel stays to cover stadium debt and operating expenses. For 2013, the county will pay $750,000 in debt service and about $2.1 million in operating expenses. The lease runs until at least 2023.

Communities without spring training sometimes use tourism taxes for beach renourishment, marketing or to improve other amenities.

For other counties, paying for spring training facilities is a much smaller percentage of the budget. Palm Beach County, for example, collects about 10 times as much in annual tourism development taxes collected by St. Lucie County, which might have to increase its tourism development tax rate to draw a second team.

My analysis did not try to calculate the benefits of increased publicity that come from playing host to spring training. Publicity by the Mets and then-Brooklyn Dodgers without question helped local communities grow and sell homes.

But such impacts are difficult to quantify and vary depending on media coverage for a prospective team and the size of the team's fan base.

Area officials have called such marketing "priceless" and such promotions have been credited for building both Vero Beach and Port St. Lucie.

The local community members, however, do not control how their area is portrayed.

In a Feb. 24 New York Times article about what players do in their off time, players gave less than glowing reviews of Port St. Lucie.

"(Fishing) is relaxing, and it kills time," reliever Bobby Parnell said in the story. "It's Port St. Lucie. It's about the only thing there is to do."

Stories could be about sunny beaches or high local unemployment, nice golf courses or the massive property bust, great fishing holes or a lack of night life.

"Everybody gets written about, and they don't necessarily get written about in a positive way," said Philip Porter, an economics professor at the University of South Florida. "When you advertise, all of the people are young and strong and pretty and healthy, and the beach is always in the sun and it never rains and you control venue. When you let someone into your community, they see the warts as well as the beauty, so you better have a darn good show if you want to call that advertising."

Some communities are taking a different path when it comes to tourism dollars.

The Baltimore Orioles asked Indian River County officials to pay $16 million for stadium improvements to fill Dodgertown, Indian River County Budget Director Jason Brown said. When those negotiations fell through, in part because the dollar amount was too great, the county spent $4 million to add youth baseball and softball fields as well as other enhancements to draw amateur events to Vero Beach.

By having tournaments that draw visitors outside of the peak tourism season, Indian River County has hotel stays in months such as July, August and September when the area struggles to bring in tourists. Minor league teams do not draw the crowds of their Major League counterparts.

The county is in negotiations with Verotown LLC to continue its partnership.

Five years after the Dodgers left, some local officials question whether losing the Dodgers hurt the area economically.

"The last year, I'd be at a game and I'd see more people that I knew from Vero there than wearing a California hat or something," Indian River County Commissioner Peter O'Bryan said. "It's not the big tourism thing it used to be."

Although entertaining for the family, minor league games also didn't seem to have much of an impact, O'Bryan said.

"I think in the long run, it's nice to say you have a Major League team," O'Bryan said. "But maybe in the long run this will be better economic activity for us."

HOW ANALYSIS WAS DONE

Scripps Treasure Coast Newspapers collected and analyzed sales tax data to see whether counties with Major League Baseball spring training have an economic leg up on those that don't.

The analysis indicates counties without spring training fared better than those with spring training.

The data collected comes from 20 Florida counties courtesy of the Florida Department of Revenue from January 2005 to October.

The counties are coastal counties ranging from Levy County south to Collier County on the state's west coast and Saint Johns County south to Broward County on the east coast. Miami-Dade and Monroe counties were not used because of their size and tourism differences from the other counties included in the study.

From there, the counties were charted individually and split depending on whether they had spring training.

Some of the counties studied are much larger than others. Had Scripps Treasure Coast Newspapers used actual dollars, smaller counties like Martin and Indian River would have made a negligible impact and could not be properly evaluated in comparison to other counties.

To overcome this problem, Scripps Treasure Coast Newspapers found what percentage each county increased or declined month to month. After coming up with those calculations, Scripps Treasure Coast Newspapers created a constant number for each county ($100,000) and determined how the $100,000 would go up or down each month based on the previously calculated percent change.

By creating a constant, Scripps Treasure Coast Newspaper could compare counties to one another with a common starting point and more easily show the trends.

Scripps then averaged the counties with spring training and the counties without spring training to show how the trends for those two categories compared to one another.

Four of the 20 counties had spring training for part of the time frame but did not have spring training during another part of the time.

Sarasota, which had a one-year gap (2009) of not having a Major League team train in the community, was left in the spring category because construction to renovate the facility is considered as part of the economic boost a county gets for spring training subsidies.

But Indian River County (Los Angeles Dodgers left after 2008), Charlotte County (Tampa Bay Rays came in 2009) and Broward County (Baltimore Orioles left after 2009) were removed from both spring and nonspring training categories. Given the difficulty in pinpointing economic activity related to spring training, Scripps Treasure Coast Newspapers simply eliminated the three counties from the equation as opposed to trying to guess when economic activity related to spring training ends and begins.

However, Scripps Treasure Coast Newspapers included the results from the three counties in a master chart available at TCPalm.com and compared Indian River County to Charlotte County in a separate chart to see whether Charlotte County grew in sales tax revenues compared to Indian River County after Charlotte County gained the Rays and Indian River County lost the Dodgers.

The study is not designed to take into account every possible impact on the economy nor does it try to answer the question of whether counties that do not have spring training benefit from neighboring counties with spring training.

Eric Pfahler

Scripps Treasure Coast Newspapers business reporter Eric Pfahler began collecting data for this study in November. He entered and evaluated the data throughout the winter while consulting with academics and reading other studies to ensure the evaluation was sound.

Pfahler began his journalism career as a sports writer and served as an intern with MLB.com in 2003. He combined his lifelong enjoyment of baseball, especially the Cincinnati Reds, with his business reporting background to develop this analysis.